Thursday, May 05, 2016

1MDB Directors - Resignation/Removal Insufficient? Must be held liable if they did 'wrongs'?

Resignation of Directors alone is insufficient - the Directors were responsible for all the actions of 1MDB. CEO alone cannot do anything without the approval and/or instructions of the Directors. Now, these Director's are responsible for the losses suffered by 1MDB, and for any 'illegal' actions of 1MDB. 

Even if the CEO is a Director, it matters not because decisions are made by all Directors - not just one Director be he the CEO or the Managing Director or the Chairman of the Board of Directors. They have equal power...Now, if they did no 'wrong' - but just made bad decisions, then they may not be liable. But if they did wrong, then they are liable, and can also be sued by 1MDB and/or its owners. Was there a 'breach of trust''?   

Directors are not mere 'seat warmers' or there for 'decoration' - they are given the responsibility (and/or trust) by the owners of the company to manage the running of the company. Go study the role and powers of the Board of Directors. [Now, one person that can overrule the decision of the Board of Directors is the owners of the company - well, if this happened, this will be reflected in the minutes.]

How much were we paying the 1MDB Directors every month? Were there additional allowances? Was it RM20,000 or was it RM1 million per person per month? It would be good that the government discloses this... [Of course, if the Director was a Ministry Representative, who usually is a public servant, he/she will just doing their job and will not have to be paid...]

Are we going to FREEZE THE ASSETS of these Directors? Maybe, we should also make sure they do not leave the country to escape the jurisdiction of our Courts. Maybe, we should prevent them disposing their assets... 

Resignation ...or were they removed by the owners? Not very clear...looks like they were removed...Was this removal because the owners of 1MDB found that they had done 'wrong' and as such need to be removed? Hopefully, 1MDB owners do not issue any letters saving (or 'protecting') them from legal actions?

Malaysian government also needs to also consider whether these former 1MDB Directors, who sit as Directors in other government-owned entities or GLCs should also be removed as Directors in such entities - this would be logical...

Ordinary Malaysians may not have the required 'legal standing' to commence actions against these Directors personally, but 1MDB and the owners, and the Finance Ministry/Government of Malaysia certainly do...

We have seen in the past, even in the case of Malaysian Airlines, Directors have not been taken to task for their 'wrongdoings' when they were Directors...

Let us not take the same position in this case, or in any such cases involving government-owned companies or GLCs...

Directors, who saw 'wrong' being done - would have spoken out during the Meetings (we will be able to identify them from the Minutes.) They may have voted against some 'bad decision' - again, this would be seen in the Minutes. 

They could have also personally brought these concerns to the owners... And, if they just could not anymore in good conscience tolerate the wrongdoings, they could have resigned on their own accord ... and not wait to be removed. Well, some of these factors may have a bearing on their liability...

People should understand the roles and responsibilities of being a Director in companies - and not just simply accept appointments as Directors as it is good for their 'resume' or just a means to get additional income and maybe even 'influence'...

In this 1MDB issue, it was Najib(the Prime Minister, Minister of Finance and Chairman of the Baord of Advisors), the BN government and maybe just the CEO who hav been taking most of the flak...but let us not forget, that these Directors are also responsible...

Let us not sweep this matter under the carpet... mere removal as Directors is insufficient 'punishment'...if they did wrong. The Directors too need to be accountable for their actions...

Now, we have removed the Directors, and maybe even the Advisors - but really, Prime Minister Najib also needs to remove now the Finance Minister. 

We need a NEW Finance Minister, who will be able to be more 'independent' in looking into the 1MDB affairs now. The old Finance Minister, alas, would have been the one who appointed the Directors, the Advisors, ...and who was in charge of ensuring that 1MDB was doing no 'hanky panky'... so, no choice, let's have a new Finance Minister...Maybe, it should be someone who is not presently in the Cabinet? Well, it is all up to the Prime Minister...

If there is going to be a new Board of Directors, let us make sure that representatives of the relevant Ministries, i.e. public servants, are also appointed as some of the Directors. This will ensure better control and monitoring - for these reps will be also reporting directly to their respective Ministries. So, erroneous decisions and/or actions could come to notice sooner and be stopped before it is implemented.

For government owned companies, and GLCs, maybe we need a new law - an Act of Parliament, which will cover all aspects of operations, maybe also even remuneration or allowances of CEOs and Directors - it is absurd that some CEOs are being paid tens of thousands ringgit per day. As a guideline, they should not be paid more than the Prime Minister.

The Act should also provide for the Auditor General to be auditing these companies - for after all, these are companies owned by the Malaysian people vide the government. 

The Act must also provide for accountability to Parliament - maybe even the obligation to report to Parliamentary Select Committee/s. Now, only after it is 'too late' do we get to know - it is thus better that there is some continuous monitoring by our 'wakil rakyat'(people's representatives)...

We have to learn from our mistakes, and do the needful now...

MoF Inc on 1MDB: Board of directors' resignation accepted, Arul still president 
By Azura Abas - 4 May 2016 @ 4:25 PM

PUTRAJAYA: The Minister of Finance Incorporated (MoF Inc) today announced its agreement to fully implement recommendations made on 1Malaysia Development Bhd (1MDB) in the Public Accounts Committee report. 

It said that MoF Inc, as the 100 per cent shareholder of 1MDB, made the decision after a detailed study and due deliberation. 

It said it has accepted the resignation of the 1MDB Board of Directors, effective May 31, 2016. 

"MoF Inc. will appoint new board members in due course, to reflect the limited business profile of 1MDB," it said in a statement today.

It added Arul Kanda would remain in his role as 1MDB president until further notice. 

"He will continue to focus on his specific mandate to implement the rationalisation plan, which will include resolution of the recent contractual dispute with IPIC (International Petroleum Investment Company)." 

The detailed PAC Report recommendations, are as follows: 

* Transfer of ownership of Bandar Malaysia Sdn. Bhd., TRX City Sdn. Bhd., Air Itam lands and Pulau Indah land to MoF Inc; 

* Dissolution of the 1MDB Board of Advisors, and, 

* Removal of Article 117 and change of all  references from “Prime Minister” to “Minister of Finance”, in the 1MDB Memorandum and Articles of Association. - New Straits Times, 4/5/2016

Malaysia dissolves 1MDB advisory board; takes over its assets

Malaysia's finance ministry said it also accepts the resignation of 1MDB's Board of Directors with a new board set to be appointed 'in due course'.

KUALA LUMPUR: Malaysia's finance ministry said on Wednesday (May 4) it would dissolve the board of advisors at 1Malaysia Development Berhad (1MDB) and take over its remaining assets, in an apparent move to scale down a state fund whose scandals have rocked the government.

Parliament's Public Accounts Committee (PAC) last month had called for the 1MDB advisory board, chaired by Prime Minister Najib Razak, to be abolished, after a probe into alleged graft and mismanagement at the fund, whose debt in January had totaled about 50 billion ringgit (US$12.5 billion).

The finance ministry, which is the sole shareholder of 1MDB, said in a statement it would also comply with the PAC's recommendation to remove Article 117 and change all references of "Prime Minister" to "Minister of Finance", in the fund's company articles. Najib is also the finance minister.

Article 117 requires the prime minister's written approval for all of 1MDB's financial commitments, including investments, and matters such as the appointment of the board of directors.

Ownership in 1MDB's subsidiaries and land assets in Bandar Malaysia Sdn Bhd, TRX City Sdn Bhd, Air Itam and Pulau Indah will be transferred to the Ministry of Finance Incorporated, the ministry said.

It did not say what happens to the debt linked to these assets.

In its report, the parliamentary committee had slammed the board of state fund 1MDB for being irresponsible and urged a probe into its former chief executive, but stopped short of implicating Najib.

The ministry also accepted the resignation of 1MDB's Board of Directors, who had collectively stepped down after the release of the report.

New board members would be appointed to reflect the limited business profile of 1MDB, it said.

However, 1MDB president Arul Kanda will remain in his role until further notice, according to the statement.

"(Arul) will continue to focus on his specific mandate to implement the rationalization plan, which will include resolution of the recent contractual dispute with IPIC (International Petroleum Investment Co)," the ministry said.

Last week, 1MDB did not meet its deadline to pay a US$50.3 million coupon on a US$1.75 billion bond following a stand-off with Abu Dhabi sovereign fund IPIC, triggering cross defaults on some of its other bonds.

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